U.S.-Colombia free trade: what’s the big deal?

FILE: Mark Penn; Win McNamee/Getty Images

I must admit, I’m puzzled as to why it’s supposed to be such a big deal that Hillary Clinton’s chief strategist Mark Penn (right) met with Bogotá’s ambassador to Washington about the controversial U.S.-Colombia Free Trade Agreement.

The key point to remember about this and other FTAs in Latin America is that they’re much more about politics than they are about economics. Ninety percent of U.S. imports from Colombia have already been entering the United States without any tariff, thanks to prior agreements. Peterson Institute analyst Jeffrey J. Schott estimated in 2006 that any welfare gains (GDP boost) from a U.S.-Colombia FTA would be positive, but “relatively small” — roughly half a percentage point for the Colombians, and a negligible amount for the United States. If anything, the agreement is about lowering Colombia’s tariff barriers to U.S. goods, solidifying trade relations, and lowering the risk that President Álvaro Uribe’s successor will have a different economic philosophy. So, claims by U.S. labor activists that the FTA would be bad for U.S. manufacturers are little more than dishonest fearmongering.

That said, I’m not on board with U.S. Trade Representative Susan Schwab’s hyperbole, either. Can it really be that the dangling FTA, not the drug war, is the root of Latin America’s problems today?

Leaders in the hemisphere and Latin America have said that the single most destabilizing factor in Latin America today may be the U.S. Congress’s failure to ratify the Colombia Free Trade Agreement. That is more destabilizing today than anything that Colombia’s neighbor Venezuela is doing or threatening to do— and that is saying a lot.